Keyman Policy



Keyman policy is an Insurance taken on the Key Persons of an organization to compensate the organization in case of their sudden death. The premium payer is the employer, the life to be insured is that of the employee and the benefit, in case of a claim, goes to the employer. The ‘keyman’ here would be any person employed by a company having a special skill set or substantial responsibilities and who contributes significantly to the profits of that organization and the loss because of whom can seriously affect the functioning of the company.



  • Only Term Insurance can be taken under Keyman Policy
  • In case of death of a keyman the firm gets money to cope up with the loss
  • Any company buying keyman insurance for its employee can claim a deduction for the premium paid for the policy as a business expense under Section 37(1) of the Income Tax Act.
  • Premiums paid by the company on the life of a keyman would not be treated as perquisites in the hands of such a keyman
  • Keyman Insurance policy can be transferred to the employee after certain years and can be used as a positive measure to improve the retention of the keyman in the company.


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